Foreign Campuses For Higher Education In India – A Half-Baked Regulation?

Dissecting the Structure of the Draft Regulation

The Draft Regulation shall regulate the entry and operations of well reputed Foreign Universities/ Institutions (“Foreign Universities”) which shall be recognised by the UGC to conduct undergraduate, postgraduate, doctoral, post-doctoral, and other programmes and award degrees, diplomas, and certificates in all disciplines (“Programmes”). What is to be noted is that the Foreign Universities through their Indian campuses cannot conduct these Programmes through online or open and distance learning modes.

In order to set up campuses in India, the Foreign Universities, who have secured a position within the top 500 of overall / subject-wise global rankings, as decided by UGC, can file an application along with an undertaking stating inter alia that the quality of education imparted will be at par, and the degrees awarded to the students will be equivalent, with that of the main campus. The issue herein is that there is a lack of transparency in formulating the criteria for ranking Foreign Universities, since the same has not been spelled out in the Draft Regulation and is left to the better judgment of UGC, which raises concerns regarding the methodology used by the UGC to rate the Foreign Universities.

Due to lack of clarity revolving around professional degrees, it is important for UGC to contemplate and bring out clarity on:

1. how and what subjects will be taught, particularly in courses like law and medicine; and
2. how professional courses will be managed (i.e. in accordance with which country’s professional bodies or would it be both).

Upon filling such application, the standing committee as appointed by the UGC to review and assess the credibility of the Foreign University shall submit its recommendations to UGC within 45 days after evaluating offered programmes, and the potential of Foreign Universities.

Subsequently, within 45 days based on the standing committee’s recommendations, the UGC may grant in-principal approval to Foreign Universities to set up campuses in India within two years. Another issue herein is that the accreditation process needs to be more comprehensively devised to ensure that Foreign Universities comply with quality research and recruit quality teachers on their campuses.

The initial approval will be for 10 years, which can be extended. A concern that may arise herein is the return on investment if the Foreign Universities intend to construct campuses from scratch. Since building campuses is an expensive process, 10 years is relatively too short a period, without the assurance of a further renewal, for anyone to have a return on the investment in infrastructure. As a result, these Foreign Universities will need to assess the feasibility of establishing a dedicated campus in India.

Another concern revolves around the renewal is that in the event the approval of a Foreign University is not renewed, for whatever reasons whatsoever, UGC in the Draft Regulation has not provided any clarity on the:

1. the validity of the degrees that are already awarded; and
2. courses which are still undergoing and how would the students be protected.

Foreign Universities can independently evolve their admission process, and criteria to admit both domestic and foreign students, recruit faculty and staff from India and abroad, and decide on fee structure, which has to be transparent and reasonable.

The qualifications awarded in the Indian campus are (i) recognised as equivalent to the corresponding qualifications awarded by the Foreign Universities in their main campus located in the country of origin and (ii) equivalent to the corresponding degree awarded by the Indian Higher Educational Institution with the following stipulations that:

1. no further requirement of seeking equivalent (?) from any authority; and
2. the degree shall have all benefits, rights, and privileges as obtained in the case of a degree awarded by an Indian Educational Institution ordinarily.

Moreover, amongst other things, Foreign Universities cannot (i) offer any programme which jeopardises the national interest of India or the standards of higher education in India and (ii) operate contrary to the sovereignty and integrity of India, the security of the State, friendly relations with foreign States, public order, decency, or morality.

The UGC has been given the power to impose a penalty and/or suspend/withdraw its approval at any time if the universities “activities or academic Programmes are against the interest of India”. However, the repercussions of those actions on the students have not been dealt with under the Draft Regulations.

Clash of the Draft Regulation with Foreign Exchange Management Act, 1999 and Repatriation of Fund

It would be interesting to note what structure the Foreign Universities take up to set-up campus in India. Moreover, the amendments will be required in the extant Foreign Direct Policy, 2020 as it does not permit foreign direct investments in trusts.

The cross-border movements of funds/repatriation of funds by Foreign Universities will have to be governed by the Foreign Exchange Management Act, 1999, and its rules and regulations.

In India, education is being imparted through not-for-profit entities. Hence, it would be interesting to see how Foreign Universities will remit any surpluses back and how the concerned authorities deal with that since the Draft Regulations are silent on whether Foreign Universities can set up “for profit” or “not-for-profit” entities in India.

In the event, Foreign Universities are allowed to set-up “for profit” entities in India, then another debate may arise whether Indian education entrepreneurs will also be given a level playing field by permitting them to either set-up or convert their existing educational entities from into “not-for-profit” entities to “for profit” entities.

Foreign Universities are required to submit an annual audit report to UGC, certifying that they are in compliance with the applicable laws of India.

UGC with good intentions has come out with the Draft Regulation to promote quality education in India, however, the viability of the Draft Regulation remains to be seen in the future.

After all of the foregoing, it is a unique Draft Regulation for Foreign Universities to establish campuses in India. However, it remains to be seen how much these Draft Regulations will do in the long run to support and disseminate top-notch education in India.

Authors: Apoorva Chandra (Partner) and Anil Khanna, (Associate) at Sarthak Advocates & Solicitors. Views are personal.